Definition: Credit card (usually plastic) is a card that assures a seller that the person using it has a satisfactory credit rating and that the issuer will see to it that the seller receives payment for the merchandise delivered.
Meanwhile, credit card allows consumer to purchase products without cash at hand and to pay for them at a later date.
Description: Credit card is inform of a plastic card that contains the information about the cardholders account, a 16 digits number of the card, issuing bank logo, hologram, card brand logo, expiry date and the cardholder's name.
On the reverse side of the card is: Card security code,Magnetic Strip "it is short strip of magnetic tape attached to a credit card, it a data that will tell reading device who you are and what your account number is" and signature strip.
Obtaining processes In brief: Credit cards are issued by Banks or Companies in collaboration with credit card issuer to individuals.
Meanwhile, credit cards are issued after an account has been approved by the card provider, after which the cardholder can use it to make purchase at merchants accepting that card.
Points of Use: Credit can be used in the following points: 1-Online 2-Banks 3-Ventures (Business) Uses of Credit Card: 1- Many credit cards can be used in an ATM to withdraw money against the credit limit extended to the card,but many card issuers charge interest on cash advances before they do on purchases.
The interest on cash advances is commonly charged from the date the withdrawal is made,rather than the monthly billing date.
2- Credit can be used to make purchase online:When shopping online,the easiest and most convenient way of transacting is with the use of credit card.
To do that;cardholder will be asked to produce some information about the card for verification by the merchant.
Merchant will need to verify the card to know if the card really worth the transaction in progress.
3- Credit card can be used to make purchase without cash at hand.
Advantages: 1- Low interest credit cards or even 0% interest credit cards are available.
However,the low interest or 0% credit cards may not last longer than a year.
2- Credit card providers often offer incentives such as points,gift or cash back in order to make their programs attractive to their customers for them (card issuers) to sustain the competition in the market.
3- It saves the risk of moving about with cash at hand.
4- Credit card brings the possibility of transacting online; on mobile or even places you have no access to cash.
5-It eases the stress of transacting regarding the time and labour.
Disadvantages: 1- Credit cards with low introductory rates are limited to a fixed term,usually between 6 and 12 months after which a higher rate is charged.
2- All credit cards assess fees and interest;some customers become so encumbered with their credit debt service that they are driven to bankruptcy.
3- Credit cards usually stipulate a default rate of 20 to 30 percent in the event a payment is missed.
Thus,if a consumer misses a payment,the rate will automatically increase to a very high level and this can be so much that the cardholder may not be able to bear the cost again.
4- Most card holder agreements enable the issuer to raise the interest rate for any reason randomly.
5- Fraud:If credit card is carelessly used,it information can be easily grabbed by an unauthorized user (fraudsters) and easily use the credit card.